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The Business Of Avatars

Mary Jane Irwin
October 30, 2008

Burlingame, Calif. -

The first thing the "New Xbox Experience" wants is your soul, or at least a cartoon caricature of it.

Pick out a virtual Barbie doll from a slew of hip-looking avatars, then delve into the nitty gritty of customizing little details--from the shape of its nose to the style of its footwear. This is the new face (and body) gamers will present to the online Xbox 360 community. And come Nov. 19, when Microsoft releases the software update containing the console's much-needed facelift, you and all your online 360 friends will pop up as avatars, too.

Avatars are a core part of Microsoft's bid to expand the Xbox 360's audience from its cadre of shooter fans to casual game players. Nintendo Wii's Miis serve the same purpose, and Sony plans to launch an avatar-populated mini virtual world called "Home" for the PlayStation 3 next spring.

Avatars are cropping up with increasing frequency in games, virtual worlds, social networks and other areas of the Web as businesses experiment with them as a tool to drive sales.

"The avatar is the core of the entire casual gaming and community experience, which is why the console gang is chasing Nintendo on it," Sean Ryan, chief executive of social network Meez, wrote in an e-mail. He noted that the most popular games on Meez are the ones that let players insert their own avatars into them.

Although there is no exact count of avatars, the industry expects their ranks to explode as the number of participants in 3D virtual worlds is projected to grow nearly fivefold to 33 million by 2013, according to Parks Associates analyst Michael Cai. And this doesn't even take into consideration all the kids and 'tweens playing in places like Club Penguin and Webkinz or mingling on social networking hybrids like Meez and Gaia Online.

Core gamers likely won't care about avatars--they just want to play games. But for everybody else, avatars help build community. "It's an accessibility thing to get people to feel comfortable using the console and generally promote the feeling that there are human beings underneath the hood," says Daniel James, chief executive of game developer Three Rings.

While Microsoft and Nintendo are looking to avatars to help them sell more consoles, social networks and Web sites hope avatars will help them attract more users and get users to stay on their sites longer. And more users spending more time on sites could boost advertising revenues and sales of real and virtual goods.





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